On Appeal from the United States District Court for the Western District of Pennsylvania. (D.C. Civil Action No. 93-cv-00073).
Before: Scirica, Nygaard and Aldisert, Circuit Judges.
This is a dispute over the interpretation of a regulation governing the amount of insurance coverage provided for federally insured joint accounts in a failed savings and loan association. At issue is whether the funds in joint accounts are insured as a single unit or as multiple units and, specifically, whether the two holders of several joint accounts are insured for up to $100,000 or for up to $200,000. Plaintiffs, Raymond and Kathleen Sekula, contend the regulation provides that each of them is insured for up to $100,000 for funds held in their joint accounts and that together they are insured for up to $200,000. Defendants, the Federal Deposit Insurance Corporation ("FDIC") and the Resolution Trust Corporation ("RTC"), maintain the regulation limits the insurance to an aggregated $100,000 maximum. The district court agreed with the FDIC/RTC (hereafter RTC), and granted summary judgment to the agency.*fn1 The Sekulas appealed. We will affirm the district court.
On November 15, 1991, the Office of Thrift Supervision declared Atlantic Financial Savings, F.A. insolvent and appointed the RTC as receiver. The RTC has the responsibility for resolving the financial affairs of failed savings and loan institutions. 12 U.S.C. § 1441a(b)(3) (Supp. V 1993). In carrying out its duties, the RTC has the same powers the FDIC has under the Federal Deposit Insurance Act ("the Act"), 12 U.S.C. § 1821 (Supp. V 1993).*fn2 It can approve or reject claims for insured deposits and determine the amount of insurance to which depositors are entitled under the Act. Under that authority, the RTC identified the eligible insured accounts at Atlantic Financial on the date it failed and paid insurance on what it calculated to be the insured portion of the accounts.
The Sekulas held six accounts at Atlantic Financial when the institution was declared insolvent. Each contained a signature card designated in the name of "Raymond F. Sekula or L. Kathleen Sekula" or "L. Kathleen Sekula or Raymond F. Sekula." No other persons had ownership interests in the accounts. The total amount in the six accounts was $169,717.52, distributed as follows:
The RTC maintained that only $100,000 of the total $169,717.52 was insured, and that Raymond and Kathleen were therefore entitled to $100,000 in the aggregate, which it paid them. The Sekulas contended the entire amount was insured because they each were entitled to receive up to $100,000 for their loss from the insured accounts -- up to an aggregate of $200,000.*fn3
On the date Atlantic Financial was declared insolvent, the relevant statute on aggregating deposits provided:
In determining the amount due to any depositor there shall be added together all deposits in the depository institution maintained in the same capacity and the same right for his benefit either in his own name or in the names of others . . . .
12 U.S.C. § 1813(m)(1) (1988).*fn4 Congress gave the FDIC the power to promulgate regulations governing the determination of net amounts due to depositors for deposits in insured depository institutions:
For the purpose of clarifying and defining the insurance coverage under this subsection and subsection (i) of section 1817 . . . the [FDIC] is authorized to define, with such classifications and exceptions as it may prescribe, terms used in those subsections . . . and the extent of insurance coverage resulting therefrom.
12 U.S.C. § 1813(m)(1) (1988). Accordingly, Congress delegated authority to the FDIC (and its successor the RTC) to define the Act in promulgating the regulations and to apply them. The RTC's determination of the Sekulas' deposit insurance coverage is governed by those regulations promulgated by the FDIC pursuant to 12 U.S.C. § 1813(m)(1) (1988)*fn5 and set forth in 12 C.F.R. Part 330.
The regulation in question, 12 C.F.R. § 330.7(b) (1991), directs how insurance is to be calculated for joint accounts. It provides:
(b) Determination of insurance coverage. All qualifying joint accounts owned by the same combination of individuals shall first be added together and insured up to $100,000 in the aggregate. The interests of each co-owner in all qualifying joint accounts, whether owned by the same or different combinations of persons, shall then be added together and the total shall be insured up to $100,000.
12 C.F.R. § 330.7(b) (1991).*fn6 The RTC interpreted this regulation to limit the Sekulas' insured aggregate to $100,000.
The Sekulas raise two principal issues on appeal. First, they contend the proper interpretation of the language of the regulation provides each of them up to $100,000 insurance coverage on their jointly held accounts -- and, consequently, that the entire amount on deposit in their joint accounts was insured. Second, they claim the RTC's interpretation of the regulation constitutes substantive rule-making and is invalid because it was not promulgated in accordance with the Administrative Procedures Act, 5 U.S.C. § 553(b) and (c) (1988). They also claim that promulgation of an alleged ...